Dubai developer Nakheel year profit up 57 pct

Indebted Dubai property developer Nakheel posted a 57 percent rise in full-year profit, saying its earnings growth showed the emirate's real estate sector was in recovery.

House prices plunged about 60 percent from a 2008 peak as a property boom turned to bust, with Nakheel among the most high-profile corporate casualties.

The government-owned developer agreed a $16 billion debt restructuring in 2011 and scaled back grandiose plans, such as building a one-kilometer high tower.

This has helped turn around Nakheel’s operations and it made a 2.02 billion dirham ($550 million) profit last year, on revenue up 91 percent to 7.8 billion.

“It is proof that investor confidence is back,” chairman Ali Rashid Lootah said, adding: “Nakheel’s strong financial performance ... is a clear sign of a recovery in Dubai’s real estate sector.”

Aside from Nakheel, Dubai’s property sector has shown other signs of improvement, in part helped by an influx of people and money from countries affected by the Arab Spring.

Prices have leveled out and even increased in some districts, although the sector remains dogged by an oversupply of commercial and residential property.

Nakheel owns and operates shopping malls in Dubai, with retail revenue up 23 percent in 2012. It did not provide figures in cash terms.

The company made interest and profit payments of around 800 million dirhams to lenders last year and has now paid around 10 billion to various trade creditors and contractors since the start of its debt restructuring.

Nakheel has cut its long-term liabilities by about 7.3 billion dirhams and will hand over 3,000 units to customers in 2013. It plans to invest 6.5 billion dirhams over the next three years on new projects.

($1 = 3.6730 UAE dirhams)